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O'Connell v. Christenson (8/15/2003) sp-5724
O'Connell v. Christenson (8/15/2003) sp-5724
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
KEVIN O'CONNELL, )
) Supreme Court No. S-10626
Appellant, )
) Superior Court No.
v. ) 4FA-98-2708 CI
)
KATHLEEN E. CHRISTENSON ) O P I N I O N
(F/K/A LUTZ), )
)
Appellee. ) [No. 5724 - August 15, 2003]
)
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District,
Fairbanks, Charles R. Pengilly, Judge.
Appearances: Peter LeBlanc, Cook Schuhmann &
Groseclose, Inc., Fairbanks, for Appellant.
No brief filed by Appellee Kathleen E.
Christenson.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
MATTHEWS, Justice.
I. INTRODUCTION
Kevin O'Connell appeals a superior court order that
imputed income to him and modified his child support obligation
accordingly. Because the superior court failed to issue findings
sufficient to justify the imputed income, we vacate the court's
order and remand the case for further proceedings.
II. FACTS AND PROCEEDINGS
Kevin O'Connell and Kathleen Christenson are the
parents of two children. O'Connell and Christenson were never
married and never resided together with the children. O'Connell
lives in Anchorage. Christenson resides near Fairbanks.
In May 1999 the superior court awarded sole legal and
primary physical custody of the children to Christenson and
established a visitation schedule for O'Connell. In September
1999 the superior court issued a child custody and support order
setting out the child support obligation of the parties. The
court required O'Connell to pay Christenson $62 per month in
child support based on a net annual income of $4,605. At the
hearing that yielded this order, the court declined Christenson's
request to impute income to O'Connell because, according to the
court, it lacked a basis for doing so. The court did require
O'Connell to pay all visitation costs in return for setting the
child support payment so low.
The subject of this litigation is a subsequent superior
court order issued after Christenson filed a motion to change
support and visitation. In that motion, Christenson sought to
modify the visitation schedule, impute income to O'Connell, and
modify his child support obligation. O'Connell filed an
opposition to this motion and a cross-motion to modify custody.
He claimed his adjusted annual income for 2001 was $8,185.38. In
April 2002 the superior court held a hearing on these motions and
issued an order a few days later. At the hearing, the court
ruled that it would impute an income of $40,000 to O'Connell and
modify his child support to reflect this change. In its order,
the court imputed an income of $43,550.13 to O'Connell and
calculated his monthly child support obligation to be $714.83.
The order also called for the parties to split equally the
transportation costs for visitation. O'Connell appeals the
change in child support and the superior court's decision to
impute to him an income of $43,550.13.
III. DISCUSSION
A. Modifying Child Support
O'Connell argues that the trial court erred in
modifying his child support obligation absent a material change
in circumstances.
1. Standard of review
We review a trial court's decision to modify child
support for abuse of discretion.1 We find an abuse of discretion
only when "we are `left with a definite and firm conviction that
a mistake has been made.' "2
2. Change of circumstances presumed
Alaska Civil Rule 90.3 permits a modification of a
child support order "upon a showing of a material change of
circumstances as provided by state law. A material change of
circumstances will be presumed if support as calculated under
this rule is more than 15 percent greater or less than the
outstanding support order."3
Under the child support order in effect prior to the
modification, O'Connell was required to pay Christenson $62 per
month. The new support obligation as calculated under Rule 90.3
is $714.83 per month.
Because the support as calculated is 1,053% greater
than the outstanding support order, a change of circumstances is
presumed. The decision to alter child support based upon a
change of circumstances would therefore not be an abuse of
discretion if the amount of imputed income is justified.
However, because we conclude that the amount of imputed income to
O'Connell is not supported by adequate findings, we vacate the
child support order.
B. Imputing Income
O'Connell contends that it was error for the trial
court to impute income to him. He claims that the court abused
its discretion when the court found that he was underemployed4
and when it determined his potential income without issuing
findings in support of the decision to do so. O'Connell also
claims that the record does not support the trial court's order
imputing to him an income of $43,550.13.
1. Standard of review
We review decisions to impute income for abuse of
discretion.5 The determination of imputed income is a finding of
fact that we will overturn only if clearly erroneous.6 "A
finding is clearly erroneous if it leaves us with a `definite and
firm conviction on the entire record that a mistake has been
made.' "7
2. The decision to impute income
Rule 90.3 provides the trial court with the power to
calculate child support based on a
determination of the potential income of a
parent who voluntarily and unreasonably is
unemployed or underemployed. . . . Potential
income will be based upon the parent's work
history, qualifications, and job
opportunities. The court also may impute
potential income for non-income or low income
producing assets.[8]
The commentary to the rule adds that "[t]he court shall consider
the totality of the circumstances in deciding whether to impute
income. When a parent makes a career change, this consideration
should include the extent to which the children will ultimately
benefit from the change."9 The voluntariness of a person's
underemployment should be taken into consideration in determining
whether to impute income.10
O'Connell claimed that his adjusted annual income in
2001 was $8,185.38, an increase from the past few years. He
stated that he had worked as a commercial fisherman from the age
of eighteen until suffering a knee injury in December 1997. The
court inquired into O'Connell's job skills, took note of his
associate's degree "in the computer industry," and heard
testimony relating to two businesses that O'Connell owns: a
computer business and a collection agency. The court also heard
testimony about various assets owned by O'Connell including a
1988 Corvette, a 1997 F-150 pickup truck, a nineteen-foot
Bayliner boat, two condominiums in Anchorage, and lake-front
property in Big Lake.
The comparative plenitude of O'Connell's assets may
place in question the accuracy of his income affidavits. But
whether O'Connell is underemployed ultimately depends on the jobs
available to him, given his physical ability and training, and
what he might earn in such jobs.
3. Findings to support imputing income
A trial court has a duty to enter findings adequate for
rational appellate review when it sets a child support
obligation.11 This is no less true with regard to the imputed
income from which the amount of the obligation is derived. In
Nass v. Seaton, we remanded the case to the trial court to make
more detailed findings and conclusions regarding its
determination of imputed potential income.12 The trial court had
determined that the father in Nass was voluntarily underemployed
and imputed an income to him of $45,000.13 The court had reached
this figure after citing the father's "reported income, his
potential income, the gifts from his father of $20,000 per year,
and the value of his extraordinarily low business and living
expenses . . . ."14 On appeal, we first determined that it was
not clearly erroneous to find that the appellant was voluntarily
underemployed.15 With regard to imputing income, we noted the
difficulty faced by a court in determining child support figures
based upon the imputed potential income of a voluntarily
underemployed parent.16 Nevertheless, we stated, "on remand it is
incumbent upon the trial court to enter sufficiently detailed
findings of fact which disclose its methodology, as well as the
factual basis, for its determination of the appropriate imputed
potential income level for the obligor-parent."17
In Olmstead v. Ziegler, we found that the trial court
adequately supported its conclusion that both parents had equal
earning capacities despite one parent's voluntary decision to
change professions.18 The father in Olmstead argued that the
trial court had failed to provide explicit findings and a basis
or calculations for its decision to impute income.19 We responded
by noting that the trial court's methodology was clear - both
parents were attorneys and the potential income for the parent
leaving the legal profession was equal to that of the parent
remaining in legal practice.20
In Dunn v. Dunn, we upheld a superior court's
conclusion that a father was underemployed and the methodology it
used to reach an imputed income for child support purposes.21 The
superior court imputed an income of $30,000 to the father and
supported this decision with references to the father's
investments and his home ownership.22 The record also showed that
the father had voluntarily retired, was in his early fifties, and
spent his time building houses.23
In the instant case, the trial court's order modifying
child support imputed an income of $43,550.13 to O'Connell. The
court did not issue written findings. At the conclusion of the
testimony at the hearing, the court noted that O'Connell might
earn "about 20,000 a year" if he worked at McDonalds and that he
was capable of doing work substantially more remunerative than
that. The court concluded that, "minimally [O'Connell] could be
expected to earn $40,000, if he put himself on the job market,
and I think that's at the very low end of what could be expected.
I'm going to impute income in the amount of $40,000 a year
. . . ."24 The court also stated that it had "effectively
intended" to impute income to O'Connell "three years ago" when
the court imposed a monthly child support obligation of $62,
coupled with a requirement that O'Connell pay for all of the
costs associated with visitation.25
Other than the reference to the possibility of
O'Connell's employment in the fast food industry and its
statement that it would "approach things in the traditional
manner," the court did not provide any rationale for its decision
as to the amount of imputed income.26 The court's rationale
appears to be based on an estimation of O'Connell's likely income
were he to abandon his businesses and find employment in the job
market. The court's starting point seems to have been that a
person working at a fast food counter would earn $20,000 in a
year. If a person worked forty hours per week for fifty weeks in
a year, and earned $10 per hour, that person would have a gross
annual income of $20,000.27 However, it is not clear that fast
food employees receive $10 per hour, or that O'Connell is
physically capable of such work. Most importantly, it is not
clear that employment opportunities exist in Anchorage that would
pay twice this figure to O'Connell.
Rule 90.3 directs a court imputing potential income to
a parent to base its determination "upon the parent's work
history, qualifications, and job opportunities. The court also
may impute potential income for non-income or low income
producing assets."28 The absence of specific findings that
justify imputing either $40,000 or $43,550.13 of income to
O'Connell renders it impossible for this court to determine
whether the court was clearly erroneous in its imputation
decision. For this reason, we vacate the child support award and
remand the question of imputed income. On remand the court may
impute income to O'Connell in an amount supported by appropriate
findings as to O'Connell's physical abilities and qualifications,
the employment opportunities available to him, and what he should
earn from them. The court may find it useful to refer to the
Alaska Department of Labor wage statistics for guidance in
determining the amount of income to impute to O'Connell. The
Child Support Enforcement Division (CSED) sometimes utilizes
these statistics to determine a parent's total income from all
sources.29 The court is authorized to hold a supplemental
evidentiary hearing if, in its discretion, it believes that such
a hearing will be necessary or useful.
IV. CONCLUSION
We VACATE the child support order issued by the
superior court and REMAND the case for further proceedings in
accordance with this opinion.
_______________________________
1Olmstead v. Ziegler, 42 P.3d 1102, 1104 (Alaska 2002).
2Id. (quoting Schuyler v. Briner, 13 P.3d 738, 741 (Alaska
2000)).
3Alaska R. Civ. P. 90.3(h)(1).
4O'Connell notes that the trial court's order does not state that
the court found him to be underemployed. He makes this claim
assuming that such a finding is implicit in the court's decision
to impute income.
5See Rhodes v. Rhodes, 754 P.2d 1333, 1335 (Alaska 1988).
6Lacher v. Lacher, 993 P.2d 413, 423 n.34 (Alaska 1999) (citing
Dunn v. Dunn, 952 P.2d 268, 270 (Alaska 1998)).
7Dunn, 952 P.2d at 270 (quoting R.F. v. S.S., 928 P.2d 1194, 1196
n.2 (Alaska 1996)).
8Alaska R. Civ. P. 90.3(a)(4).
9Alaska R. Civ. P. 90.3 cmt. III.C.
10See Robinson v. Robinson, 961 P.2d 1000, 1004 (Alaska 1998).
11See, e.g., Berkbigler v. Berkbigler, 921 P.2d 628, 631 (Alaska
1996); Waggoner v. Foster, 904 P.2d 1234, 1235 (Alaska 1995);
Adrian v. Adrian, 838 P.2d 808, 811 (Alaska 1992).
12904 P.2d 412, 418-19 (Alaska 1995).
13Id. at 417 & 418 n.12.
14Id.
15Id. at 417.
16Id. at 418-19.
17Id. at 419.
1842 P.3d 1102, 1106-07 (Alaska 2002).
19Id.
20Id. at 1107 n.16.
21952 P.2d 268, 271 (Alaska 1998).
22Id.
23Id.
24In the order there is no explanation for the increase in imputed
income from $40,000 to $43,550.13 between the hearing and the
order. The child support affidavit filed by O'Connell in January
2002 lists rental income in the amount of $1,650.13 and an Alaska
Permanent Fund Dividend in the amount of $1,850. These figures
add up to $3,500.13. The court likely imputed income from
O'Connell's labor to be $40,000 and added the rental income and
dividend. This would account for all but $50 of the discrepancy.
However, this possible explanation is only a guess.
25The transportation costs were substantial given O'Connell's
residence in Anchorage, Christenson's residence near Fairbanks,
and a requirement that the children only be transported by air.
26The court did further describe the compromise in its earlier
order that set child support at the poverty level in return for
O'Connell agreeing to accept the expense of visitation. The
court then ordered that henceforth the parents will split
visitation costs.
27The adjusted annual income on which child support is based would
be somewhat less. See Alaska R. Civ. P. 90.3(a)(1).
28Alaska R. Civ. P. 90.3(a)(4).
2915 AAC 125.050(a) provides that when CSED is unable to obtain
accurate financial information "the agency will use the best
information available, including any information available to it
through automated sources such as information maintained by the
Department of Labor and Workforce Development, to determine the
parent's total incomes from all sources." Another section of the
regulations that specifically relates to imputing potential
income for individuals determined to be voluntarily unemployed or
underemployed directs CSED to "determine potential income by
considering, based on available information, the parent's past
income, skills, work history, and education, and the job
opportunities in the area where the parent physically resides."
15 AAC 125.020(b).
